The Wall Street Journal reports that Sony will release a new smart phone "capable of downloading and playing PlayStation games" later this year, as well as a competitor to Apple's iPad that may also play PSone titles.

The Journal notes that the original PlayStation game-playing smart phone is being developed by Sony and mobile handset manufacturer Sony Ericsson. That's a story that we've heard plentyoftimesbefore in various incarnations, but with declining PSP sales, a cool reception to the digital download-only PSPgo, and increasing competition from iPhone and iPod gaming, the timing sounds logical.